BCA’s market capitalisation soars, largest in Southeast Asia

Bank Central Asia (BCA)’s market capitalisation grew a compound annual rate of over 44% over the past two years to reach a high of IDR 1,119 trillion ($79.8 billion) at the end of April 2023. The bank serves mainly Indonesia’s domestic market, and is not only the largest listed company in the country but also the largest bank in Southeast Asia by market capitalisation; DBS Bank, the region’s largest bank by asset, saw its market capitalisation hit a high of $63.7 billion in the same period.

Hendra Lembong, BCA’s deputy president director and CEO, attributes its dominant position in the Indonesia Stock Exchange (IDX) and share of the IDX Composite, for its current high 4.8 price-to-book ratio.

The bank has some of the strongest financial ratios by international standards. At the end of 2022, BCA reported a return on equity of 24.7% and return on asset of 3.7%. The bank’s cost-to-income ratio also improved to 32.5%, reflecting efficient operational management as well as a 29.6% year-on-year record profit growth to IDR 40.7 trillion ($2.9 billion) on the back of an improved net interest margin of 5.9%, a low non-performing loan ratio of 1.8% and very robust capital adequacy ratio of 28.9%.

BCA’s strategic emphasis on its stable funding base, particularly through mainly retail-sourced current and savings account (CASA) growth, underpins its strong liquidity. CASA funding reached IDR 843.3 trillion ($59.9 billion) as of March 2023, accounting for 81.2% of the bank’s total third-party funds.

This focus on sticky retail CASA has ensured a reliable and low-cost source of funds, supporting BCA’s financial resilience and profitability, with a healthy 65% loan-to-deposit ratio, on the back of a 12% loan growth and declining share of long-tenor marketable securities.

This is unlike the start-up and venture capital (VC) driven CASA growth and asset-liability mismatches that precipitated the current community and regional banking crisis in the United States.

Transactional banking capabilities delivered through BCA’s online and offline channels such as the branches, are important in enhancing customer experience and satisfaction.

In addition, the bank’s contact centre, HaloBCA ‘1500888’, operates as a mega call centre, handling approximately 110,000 contacts per day. It is a level of customer experience that the bank aims to replicate online, explained Lembong.